BEIJING: A number of Chinese state-owned enterprises (SOEs) have announced that they will seek delistings from the New York Stock Exchange (NYSE), a move experts say is a sensible business choice made on their own to reduce their exposure to regulatory uncertainties.
China’s major oil producers Sinopec and PetroChina had both informed the NYSE that they will apply for voluntary delistings of their American depositary shares listed on the exchange in accordance with laws and regulations, the energy behemoths said in separate announcements.
Citing the small trading volumes of their US listings but heavy relevant compliance costs, the companies said they plan to submit delisting filings to the US Securities and Exchange Commission around Aug 29 and are expected to stop being listed on the NYSE by September.
Three other SOEs – China Life Insurance Co Ltd, Aluminium Corp of China Ltd and Sinopec Shanghai Petrochemical Co Ltd – also said they will voluntarily apply to delist from the New York bourse, effective early next month.
The China Securities Regulatory Commission (CSRC), the country’s top stock market regulator, said that it respects the decisions made by the United States-listed Chinese issuers based on their own conditions.
The commission will maintain communication with relevant overseas regulatory agencies to jointly safeguard the legitimate rights and interests of the Chinese enterprises and their investors, an unnamed official from the CSRC was quoted as saying in an online statement.
“Listing and delisting are normal (activities) in the capital market.
“According to announcements from relevant enterprises, they have strictly abided by the US capital market rules and regulatory requirements since their listing in the United States, and the delisting decisions were made out of considerations for their own business development,” the official said.“As these enterprises are listed in multiple stock markets, and their shares traded in the US only account for a small proportion of the total, their delisting plans from the US stock markets will not affect the continued use of domestic and foreign capital markets for financing and development,” the official added.
The delisting decisions came amid an ongoing audit dispute between China and the United States that has exposed some US-listed Chinese issuers to the risk of forced delistings.
Dong Dengxin, director of Wuhan University of Science and Technology’s Finance and Securities Institute, said the delisting decisions of those enterprises were sensible.
This was because Chinese enterprises faced a discriminatory regulatory environment in the United States.
“The Holding Foreign Companies Accountable Act, which was passed in 2020 in the United States, has meant that Chinese enterprises are forced to deal with unreasonably strict and institutionally discriminatory information disclosure requirements,” he said.
The act is a law that requires companies publicly listed on stock exchanges in the United States to declare they are not owned or controlled by the Chinese government. — China Daily/ANN